Early Impacts of Pandemic Suggest an Abrupt About-Face for the Remodeling Market

A Lending Indicator of Remodeling Activity (LIRA) released on April 20 by Remodeling Futures program shows that home renovation and repair expenditures are likely to drop in the 1st quarter of 2021.

The drop will be as a result of the current economic fallout from coronavirus pandemic. Before the onset of Covid-19, LIRA had indicated that there would be a positive rebound of expenditure on home remodelling with a 3.9% annual growth. However, new data based on both actual and speculated impacts of economic fallout, indicate a drop in expenditures for this year and the situation is likely to be more severe next year.

Chris Herbert, a managing director at the Joint Centre for Housing Studies from Harvard University, states that available clues indicate that there will be a significant decline in major remodeling indicators of construction of new homes, sales of homes, and value of existing homes in the next quarters.

Some homeowners are anxious about investing a lot of finances in improving their homes amid the Covid-19 crisis.

The US economy has drastically changed since mid-March. The Remodeling Futures Program has tried to save the situation by providing with a range from the downside for the outlook of home remodelling.

The downside range features speculations for various core model inputs. These inputs include building material retail sales, prices of homes, and GDP.

By the 3rd quarter of 2020, the quarterly expenditure on occupied houses’ improvement and repair is expected to drop significantly. By early next year, annual expenditures are speculated to drop to $322 billion with a chance for a more severe situation to follow.

If the current economic crisis improves in the remaining quarters of this year, there will be high chances of significant recovery of remodelling activities as we proceed to 2021.

 

Reference;

https://www.jchs.harvard.edu/press-releases/early-impacts-pandemic-suggest-abrupt-about-face-remodeling-market

 

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